Markets were very much influenced by the Bank of England's Inflationary report and the Federal Reserve's interest rate announcement. Sterling hit lows against both the US dollar and the euro after the Bank of England's inflationary report claimed that inflation would fall below its two per cent target in two years' time if interest rates rose in line with market expectations. The data was very much greenback positive, however, once the US markets opened and the Federal Reserve announced that they were keeping their interest rates on hold, hinting they could see the recession nearing an end, the USD weakened off against both the pound and the euro as high-yielding and riskier currencies to became appealing to investors and traders.
Sterling
Sterling hit a two-week low versus the dollar and was down against the euro as the Bank of England's forecast that inflation would remain well below target cooled speculation of an early interest rate hike.
US Dollar
The US dollar started trading up against both the euro and sterling mainly due to the negative UK and European data released earlier in the day. However, once the US markets opened and the Federal Reserve announced that that they were keeping their interest rates on hold, making its clearest statement to date that it sees the recession nearing an end, both sterling and euro clawed back earlier losses.
Euro
The euro was up against sterling mainly due to the Bank of England's inflationary report and UK jobless figures being so poor. However, the single currency was under severe pressure from the ever-strengthening US dollar which was thriving on all the negative data being released from this side of the Atlantic.
Japanese Yen
The yen felt selling pressure as Asian stocks rebounded following the Federal Reserve's FOMC meeting.